The government’s new YourSuper Comparison tool serves the purpose of making MySuper product performance clear, simple and comparable but most importantly, it calls out underperformance against APRA’s benchmark testing.
I am a fan of online calculators and tools which make planning and decision making easier for the everyday person. Overall, I think the tool is a great initiative …. for those that invest in a MySuper product.
Features that meet the brief
Fund performance: The tool itself provides 3, 5, and 7 year returns and fees, for products with information tailored to a member’s current super balance (provided they log into the personalised version through MyGov). The user interface requires little effort to obtain some useful, easy-to-digest performance and cost indicators. A lot of people will find the tool easy to use and compare the performance of funds, and ultimately decide whether or not they’re getting a good deal.
Multiple funds: Another feature that can work well towards improving member retirement outcomes is the indication of more than one super account. Consumers can choose to consolidate multiple accounts within the tool, after deciding which of their funds performs the best. All super simple stuff.
The missing piece
Once I started playing with the features and comparing funds, it prompted me to check the product performance for both myself and my wife. And this is where the tool begins to fall short.
We don’t invest in MySuper products, so the tool doesn’t provide insight into whether our products are performing against APRA’s benchmark, nor does it provide the ability to directly compare our products against other products in the tool. This leaves us, and many others, in a position where comparability will remain relatively difficult. Given that only around 30% of superannuation assets are in MySuper Products*, I believe that member engagement will remain low.
That said, if I was in a MySuper product, the tool would be a catalyst for me to investigate products based on performance and cost. Many Australians will likely go through the process of changing funds if the tool shows their product coming up shorter than others. The problem is, I only became aware of the tool because I work in the superannuation industry. If I didn’t, in all honesty, I would be blissfully unaware of its existence and the potential benefits it holds for my retirement. More is required to create awareness and use of the tool.
Of course, the biggest benefit of the tool is that it calls out whether a product is an underperformer. An absolute fantastic feature if you are in a MySuper product, and actually use the tool. Whether people will find their way to it is the big question. The fact that funds were required to write to their members in September if they had an underperforming product, and direct them to the tool, is something that really struck me. Letters were sent to a million people. At present, approximately 70,000 of those have closed their accounts and moved to better products …. a 7% strike rate! If these members can’t be engaged in the tool, then what are the odds of anyone using it? And not to strain the point, but again this is only MySuper product members.
At the end of the day, super members who invest in a MySuper product and make their way to the tool will likely end up with a better deal and that’s something … which is always better than nothing at all.
By Paul Armstrong, IQ Consultant